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Squawk on the Street

News/Business. Mark Haines, Erin Burnett. Opening bell market action.

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S&p 17, Us 17, Bob Pisani 10, U.s. 8, Bob 7, Comcast 6, Scott 5, America 5, Melissa 5, Chicago 5, Rick 4, Jonathan Tisch 4, Steve Liesman 4, Nyse 3, Ibm 3, Ubs 3, Intel 3, Mike Huckman 3, Keith 3, Costco 3,
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  CNBC    Squawk on the Street    News/Business. Mark Haines, Erin  
   Burnett. Opening bell market action.  

    October 2, 2009
    9:00 - 11:00am EDT  

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guest host is economist bob barbera. keep the faith? >> keep the faith. >> people have said, hey, the fed has to think about exit strategy. we don't have to worry about that. >> make sure you join us monday.
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"squawk on the street" is coming up next. live from the financial capital of the world, this is "squawk on the street." i'm melissa lee in today for erin burnett. >> i'm scott wapner in for mark haines. let's get you caught up on the markets on the back of a very disappointing employment report today. you see it's going to be a lower open across the board with the dow set to open down about 100 points. the s&p will be under pressure as well by about 12. in this building on yesterday's really down day, down about 2%, melissa, across the board. >> what a way to start the fourth quarter. we should note the reaction of the jobs report came very quickly and across the board when it came to all the markets, whether it be the oil market, bond market rallying, and the dollar rally on the back of that weaker than expected report. let's go in-depth into this report. bring in senior economics reporter steve liesman for the
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latest. >> thanks very much. disappointing jobs report. markets and economists had been hope for better, incremental improvement that we've had in job losses to continue. it goes along with other data that kind of get to this debate about whether or not this recovery we've seen has taken a breather or whether or not it's actually stalled out. the folks over at john sylvia at wells fargo says it's no v-shaped recovery. nonfarm payrolls down 263,000. economists had been expecting 175,000. unemployment rate in line with what is expected. 9.8%. hourly earnings disappointing. that's going to weigh on predictions for consumer spending. let's look at how we got here. again, a lot of the laggards remain the laggards. goods producing, minus. manufacturing again showing sizable declines. service providing not providing the kind of engine it had with
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retail. again, down 39,000. and then one of the big shockers you'll see on this next screen here is the decline in government spending of 53,000. that goes along with the huge declines we've seen in local and state educational workers. folks, they appear to be firing teachers out there. some of the economists in the last panel on "squawk box" suggesting that it's a seasonal adjustment problem. that may be the case. go back and look during the summer. it has been a very sort of strong decline in local and education workers over the past several months. the real unemployment rate. that's the number that usually calculate to discourage workers. those part of the workforce only marginally, kicking up to 17%. the one bit of good news, guys, was temporary help declined only marginally. that has come back. looks like we had a guest on the previous show saying there's the temporary help numbers.
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down 1.7% there. creeping back up. we have had some sense that maybe instead of hiring full-time workers right now employers are dipping their toes back into the labor market by hiring temporary workers. that was the one bit of good news in otherwise disappointing reports. >> steve, thank you very much. let's hit the markets now. wart the bob pisani here at the big board. hi, bob. >> the important thing here is how much of a floor is there under the market right now? we lost, what, ten points on the futures? bonds of course rallied, dollar rallied. the important thing is there has been a floor under the market for the longest time now. traders believe that. i called the many traders i could get here. all of them are telling me 1,000 support level. we'll open around 10:15 today. that's a correction of about 6% from the 1071 closing high, that was a few weeks ago. that was the high for the year. we've already corrected roughly 6%. another 4% to pick it 10%, that's like 965 area. most traders i talked to said
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they would be interested in buying around 1,000, 1010 on the s&p 500. that's 10 or 15 points from where we're going to open. we'll see how much real buying interest there is. not a lot of big stock stories. walgreens is up 1 1/2%. they reported a stronger than expected 5.3% rise in their same-store sales. they've had great numbers recently. tradertalk.cnbc.com. mike huckman, of course, nonfarm payrolls affecting the nasdaq as well. >> good morning, bob. that is right. on the back of that weaker than expected jobs report we have the nasdaq in the premarket trading lower this morning. after the nasdaq suffered the biggest point and percentage decline in months yesterday. in fact, it took the biggest hit of all three major indices yesterday. not even a few major upgrades, major stocks have doing anything to liven things up here. we have an upgrade at apple out of ubs to, get this, a $265 price target, upping it to a buy there. we've got intel upgraded by oppenheimer with a $28 price
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target. we've got costco upgraded by rw baird with a $65 price target. what are those three stocks doing in the premarket? lowered. news that ibm is trying to undercut the price of the corporate e-mail service. ge, the company that owns cnbc, now confirming it is in talks to possibly do an ipo of nbc universal. watching shares of comcast. they took a hit yesterday. still under pressure this morning. finally, biotherapeutics, the ticker is tlcr, they're going to ring the opening bell at the nasdaq this morning. they really rang the bell here yesterday on their ipo. up 11%. when the nasdaq was down 3%. making it the best drug company debut, i think, in at least two years. farmersmarket.cnbc.com. follow me on twitter at mhuckman. >> you're looking sharp today, huckman. i should have brought a suit to compete with that. $1.90 with oil. look at a 24-hour chart, we were
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down about 1 hoin $30 with a nonfarm payroll numbers came out. we weakened but the whole negativity isn't just about the payrolls. you have to also consider the iran talks have gone relatively well. that's involved the dollar firming up, was a factor as well. i also want to look at the rest of the complex because it's generally weak. it's been a couple weeks since i've been down here. natgas, 250 going down to 2 and look where we are at this hour percentagewise, holding up bit better than everything else. want to look at gold. safe haven and relativity. we were down $4 when the nonfarm payroll came out. now we're down $6. weakened but not by a whole lot. the dollar having a factor there. we are, of course, under the $1,000 mark. it's interesting, rick, as they go to mr. santelli in chicago, the dollar now sort of all over the place. >> yeah, you know, it's so fascinating and thank you to watch the foreign exchange side. the dynamics today are very
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enlightening. of course, you get bad data. it hurts the equity markets. the european currencies keep the swiss off to the side. the euro, the pound, they're under pressure of the day. they're under a little pressure on the week. the dollar/yen is the one, of course, that gets a lot of its directional relationships from the weakness in equities pushing it higher. so the yen does better. it's doing better on the week. but we're post that half-year point which was our end of quarter, their end of half year. this is going to be key over the next several days. we still have factory orders put out four monthlien creases in a row. last month, up 1.3 was the highest. we want to watch that. all in all, the word on the floor seems to be, don't fight momentum. remember when the equities are moving up. we had that big technical reversal last week. we had the'sle talking about that outside data. tax if you shorted on that, pay in equities, you would be looking pretty good. back to you. >> all right, rick. thanks so much. asian markets meantime ending to the downside overnight.
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japan's mick kay sinking 2 1/2 percent. australia is falling. new zealand's market giving up 1.1%. while markets in south korea, india and china all close on the day. in europe right now, not a real pretty picture there, too. the ftse is down 1 3/4%. the cac is down 2 1/3%. the dax the under a bit of pressure as well. >> it's interesting, scott, because we are looking at a sharply lower open. the friends have found that on days where we have a weaker than expected payroll numbers. the market opens sharply lower but trades modestly higher throughout the session. we'll see how that stands out. >> regardless of what the jobs report comes in at, right, if it's better than expected, the market may open better. if it's weaker than expected, at the end of the day the s&p typically closes at the same amount. >> exactly. so have heart. coming up next, the word on the street and the buzz beyond. plus, secretary of labor joins us with the administration's take on this morning's really disappointing
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jobs report.
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let's get to the commodities corner, see what is move right now. of course, we have a slight dollar strength here, weaker than expected payrolls number. doubt about the economic recovery. we have crude oil down by more
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than 3% right now. as for gold, still trading below $1,000 an ounce. take a look at that, quote, unquote, safe haven. as for platinum, which is a little bit more of an industrial met metal. it is down by 1.1%. on to the coffee is trading slightly higher. as for sugar, the hedge fund favorite because it has been hitting record highs. it is down by 3 3/4%. as for o.j., morning time, appropriate, coffee, o.j., sugar, higher by a third of a percent. >> let's get back down to bob pisani on the floor as we set you up for this trading day. disappointing jobs number as we said, bob, couple that with 2% across the board declines yesterday. is this the catalyst traders talking down on the floor that this is the catalyst now for that long talk about corrections? >> well, yes. it is the catalyst. what kind of correction are we getting? remember, scott, we haven't had any substantial correction in
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this whole six months. the worst that we had was a 9% correction. that was in the june and july period. everything else has been down 2%, down 3%, and then rally back. so right now the way we're going to open, we'll be down about 6% from the highs that the s&p hit back in the middle of september. >> bob, at the same time, you know, for the s&p 500, you make a good point that we're set to open at around 10:15 or so. 10:20 is the 50-day moving average. you raised that 50-day moving average and you've lost some for the market. >> i would agree. but here's the point. there is definitely an underlying floor to the market because when you call traders, all of them had been wanting some kind of correction. why? most of them have been wanting a correction because they want to be able to buy at lower prices, not because they believe the market is necessarily going to fall completely apart, although there are double dip camps out there. that's a very important
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psychological feeling. we'd like the market to drop to we is buy lower. most traders say 1,000, 1r00 5. levels of interests where they consider buying aggressively. that is not even a 10% correction. melissa, you're at 965, 970. so if this plays out the way it looks like, and the talk on the traders is accurate, we should get some support down here within the next 10 or 15 points. >> in the fixed income market, though, fwob, 30-year note, below 4% for the second day, psychologically, though, doesn't that sort of revive the talk of a double dip recession and impact that psychology you were talking about? it. >> does. here's the scenario that i'm presenting what a bullish trading scenario is. it's not necessarily a bad thing to have a dip in the market as we head into earning season. if we can get relatively positive comments on the earnings front, that's a big if,
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the market is definitely going to come back at this point. now, we get really muted comments, i think can be a little bit of a tougher time moving things forward. >> bob, what's really kept the market, there's been a floor put under the market. what has kept it from going lower is the buying on the dip strategy at that point that goes out the window. those who wanted to buy on the dips keep waiting because they think a steeper correction is coming. >> it's a psychological game og gone he going on here. it's been obvious from the traders i've been talking to, buying and selling every day, even the guys who have been long have been looking for some kind of correction to see where they can get prices, get in at a lower level. that's a very important psychological distinction. i know i've said it, but a lot of times six months go, nobody was talking about that. nobody was saying, i want it lower so i can buy. they were trying to find a bottom at all. >> all right, bob. thanks.
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up next, the word on the street and the buzz beyond the trading floor. in less than 15 minutes from now, labor secretary hilda solis will tell us what the administration thinks about the lousy job numbers and what they mean for the u.s. economy. you're watching "squawk on the street" on cnbc. 100 years of engineering excellence is right on time. it's gmc truck month. shop sierra 1500 slt with the 403 horsepower 6.2 liter v8. it's the most powerful half ton v8 in its class. step up to the best. it's gmc truck month. get 0% apr for 60 months on 2009 gmc sierra or get $6,000 total cash back on select 09 sierra 1500 extended and crew cabs in stock. see your gmc dealer today.
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the second day of the fout quarter is set to open on a down note here. futures improving just a touch here, but we've got a weaker than expected employment report here. the dow jones industrial average is set to open by about 80
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points lower or so. the s&p as you see there, looking about 10 or 11 points to the downside. joining us now is ceo of benjamin. >> thank you. >> as i just mentioned, really ugly jobs report. is that the catalyst now, combined with what we saw yesterday, to start this correction that everybody has been talking about? >> i think there's been a lot of underlying catalysts. in fact, the way the rally came up to higher levels on volume, that was suspicious. and also the jobs reports are always, in my view, taking suspect. even the numbers they have, i believe the jobless rate is much higher. >> what sort of correction are you looking for? >> well, i think it's interesting that a lot of money on the sidelines looking to buy dips. i don't think you'll see the big straight down. you'll see gap-back rallies and you'll see another setback on the way down. i think you're looking at 9200, roughly, in the dow and the s&p 500, you know, you have to watch that 1020 level as was mentioned
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earlier. >> at some point doesn't the buy on the dip strategy run out of a little bit of momentum if we think the correction is going to be worse or if you take a queue from the fixed income market? >> i agree with that as well. i think it also xs. >> really setting the table for investors for today, as melissa and i were talking up stair, even though you may get a lower open at the jobs report, it's not set in stone this day will be a down one. recent history shows that while we may open weaker on a disappointing jobs report the s&p closes much higher. >> i agree. that goes back to buying the dip theory and the technical levels that people perceive are out there, trying to buy those dips and see if we can catch a rally. if they're wrong, watch out on the way up. >> t terry, thank you very much. >> thanks, scott.
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now let's get the buzz beyond the big board in jersey city. peter, always great to see you. you know, we were having a discussion with bob pisani about mentality in the market. there's a lot of cash on the sidelines. $3 1/2 trillion right now. peep want to buy. we are sitting at the level t on the s&p 500 where we will breach that 50-day moving average. we continue to get signs of weakness about the u.s. economy. what's your take in terms of whether that psychology will actually hold this time around? >> right. well, melissa, we are at a very, very important point in terms of the s&p 500. in all of the major indexes are basically resting on a very, very important could be support, maybe not. this morning we're clearly opening lower. futures are telling us that. yesterday we had 190 out of 197 industry groups close lower on substantially greater volume. a classic distribution day with the dow down 200. we had six out of the last seven
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trading sessions weakness and increase in volume. clearly the market has been pressing this, giving us an indication that we are going to go lower. do we close lower? i suspect yes in spite of what was just mention by the previous guest. i do think we close lower today. the fourth quarter is off to a weak start. anticipated, we've seen a hun run up in all the major indexes. volume dried up at the end of the third quarter. i do suspect we're going tv some work to do here on the downside. earning season starts shortly. that should give us some support. i do think there's going to be surprise there's to the upside. we do need a down graft. the market needs it. the trillion and a half dollars on the sidelines will slowly go into the market. it's not going to be in one swoosh but in stages. it will support the market. we're not going to see that crater effects that people are terrified of. you know, people are going to buy into the market here. >> talking about that big swoosh, though, what will it take, do you think, based on your data points there on your trading floor, for people to actually pull the trigger on
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that money? is it s&p at 1,000 that bob pisani mentioned. do we need to correct lower i don't the 15 level that we are anticipating in today's market? >> melissa, it comes down to one thing. one word, in effect, it's confidence. people need confidence in knowing that, you know, earnings are going to deliver to the up said if we've seen tremendous reengineering of accounting to deliver on strong earnings, better than expected earnings over the last two quarters. now the question is, this is where the rubber meets the road. are we going to see earnings that are not re-engineered by top line growth in addition to bottom line growth. >> it's going to be in the earnings season which diks off in two weeks. >> will you go. you're going to see some role cash come into the market. >> peter, always good to talk to you. >> thank you. final countdown to the opening bell on the other side of this break. >> this is cnbc "squawk on the street" live from the new york stock exchange. when you buy a stock?
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welcome back to "squawk on the street." just minutes to the opening bell. let's go to steve liesman and bob pisani because we are looking at a sharply lower open pentag . steve liesman, i know you try to find the silver lining in this all, but the markets are not buying it. we're going to have the labor secretary on in a moment, but what would you ask her, i'm curious. >> you know, whether or not her hope for a near-term correction or sequential improvement is now off the table. one of the things i'm hearing from traders out there, melissa, is the revisions to prior months is really what concerns them, because they feel as if the revisions point away to the future. when you start to bring down prior months, it means that the next nomonth is going to be bads well. when you start to revise upward, show that things are improving
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napts a big thing. i would is ask about the participation rate, melissa, because that is hit down a 23-year low. it really flattered or helped the unemployment rate. that's a big thing, i think, economists talk about right now is why people seem to be dropping out of the workforce and whether or not that's something that creates a potential for a kind of structural unemployment in future years. >> and, steve, those who say that stimulus is not working are going to be grabbing their megaphones today, right? >> i think they are. i think they have some defending to do, although if you look at what happened to government employment, down 53,000, with a lot of states buying worker, it's easy to counter that argument by saying, you know what, it would have been a lot worse without the money given to the states. >> i agree with steve if traders down here don't often look at the minutiae on the economic reports. a number of them came up to me, the average hourly earnings and the average weekly average falling 0.1%. they were surprised at that because you would expect to see those increase a little even if
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the employment levels were going up. at least, steve, that would be going up and it didn't. those two numbers were disappointing. >> the only positive side of that, bob, looking for minutiae, is the lower or almost zero decline in temporary health. that is hardly a thing to hang a bullish hat on. as i've said, i think the case for recovery has always been tentative here. it needs reaffirmation every day. it didn't get it all week. in fact, it hasn't gotten it from the month of seth. it's been a very lackluster data. it's been straight across when you would have hoped for further gains. >> i want to ask you about something moving rights now, the dollar. the dollar is losing all of its steam, facically. could that in fact, be support for this market as we trade on? >> one trade in the third quarter that has worked perfectly is any time the dollar down, generally buy equities, particularly buy commodities and industrials. the dollar weakening here is a good sign for the at least morning activity. >> i wonder, guys, if the idea
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of another stimulus gets back on the table here now with these kind of numbers? >> right. >> certainly another month of this. >> good point. especially with the 30-year trading below 4%. i mean, that doup tip. >> yield on the 10 and the 30-year have been coming? >> exactly. that's certainly going to heat up. so we are seconds away from that opening bell there. even there as we anticipate appropriate lower open. here at the big board, apollo commercial real estate finance celebrating that ipo. we will speak with the ceo in. usa moment. and then at the nasdaq, talecris is celebrating a blockbuster ipo. >> market reporters are standing by at the nyse, nasdaq, nymex and cme group. let's start with bob pisani. bob, long time no see. >> here's the talk on the floor. had something changed, some
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mental attitude changed, or is this the buying opportunity that still is there? remember, the important thing is most traders have been expecting some kind of correction which hasn't happened in months. largely so they could get in at lower prices because a lot of traders didn't participate in the move up and feel left out. that's an important psychological change from where we were just six months ago when everyone was just looking for a floor. now we're going to test that a little president we're down here. futures opening down six points. we're 5 1/2, 6% correction from the september highs now. that's not much, but it's one -- it's most notable one we've had since july/june. how much support there is? most traders are talking about 1,000 is an important level. that's only 7% or 8%. that's not a 10% correction. interesting level to watch at this point. now we're going to test the psychological level. not a lot of individual stories out. walgreens did have nice same-store sales numbers. that stock is opening on the upsi upside. let's go over to mike huckman talking about the nasdaq, opening to the downside as well
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here. still only 60 points on the downside for the dow. michael? >> i got no audio. all right. sorry about that. audio trouble. brian shactman at the floor. oil is down about $1.90. it's one of those situations where we're actually relatively steady from the last time we checked on it. the shork report said watch 3913. we reset to the downside. below that right now. could be pretty quick down to 66. so keep that in mind. there is one particular thing bucking the trend here. it's natural gas. actually, look at brent real quick. want to point out we have record output posting over there out of russia. that news coming today. 10 million barrels a day. also want to talk about natural gas quickly, bucking the trend. it is to the upside. traders tell me it is not a fundamental trade. with that.
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also, talk about gold is now doing better than it did prejobs report. the dollar. george of rbc saying, the dip early today could have been a buying opportunity. although it's a very cautious market. finally i want to point out silver and copper are weaker than gold. although they, too, are off of the lows. i throw to rick. we saw the movement a half hour ago when we were talking the dollar is officially weaker and the dollar index is headed towards 7 7. >> absolutely. fabs nating. you're down about, oh, i would say a tenth of a cent on the dollar index on a net change versus yesterday. maybe what's more notable is right at 8:30 eastern, it made its high move of the day, which we are now a third of a cent below to give you some perspective. but it hasn't been a bad run for the dollar this last week. and i tell you what, viewers, you need to think that there was a time in equities when no matter how much people talked about shorting it, that fuelled more upside. now it seems everybody is talking about buying a dip and it's a small correction. every 25% correction started out
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at 2% or 3% or 5% correction. in terms of the dollar, that linkage is going to last forever? i doubt it. but when do you see a dollar to survive in the same direction as either case. interest rates, it was an amazing morning. got down to the lowest levels. may and the ten-year. april in the 30-year. reversed a bit. a bill big down week for the entire curve in terms of rates. now let's go to mr. huckman who is, of course, at the nasdaq. >> thanks, mr. santelli. we do have that audio problem fixed now. the story is the same as before. we're still down 0.6% out of the gate at the nasdaq. keep in mind they were down huge 3% here yesterday. we do have a few upgrades that are working but not like you would expect them to be. all three of these stocks upgraded by various firms to the equivalent of a buy today. costco, intel, and apple. but apple had a $265 price target put on it by ubs. it was up 0.8%. comcast shares are hugging the
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plat line after digging a 7% hit yesterday with now those reports reaching critical math that's in talks to possibly take a majority stake in nbc universal, the company that owns cnbc. google is down maybe, market related but maybe on the report that ibm is now in a dual with google over corporate e-mail service. we also have biotherapeutic. it rang the opening bell here yesterday. but ipo'd yesterday, up 11%. today perhaps we're going to see a little bit of propt taking there in that bio pharmaceutical company. for more, check out the blog farmersmarket@cnbc.com. melissa, back over to you. >> thanks, mike. michael, thank you. up next, the cnbc edge for this jobs friday. plus, bob pisani talks to ceo of apollo commercial real estate as they celebrate the ipo which, by the way, trading down by about 10%. you're watching "squawk on the street."
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the nation's job market continuing to weaken in the month of accept with the unemployment rate rising 26-year high of 9.8%. joining us in a first on cnbc interview with reaction from the white house, secretary of labor hilda solis. madam secretary, great to speak to you. >> thank you. good morning. >> investors, americans out there are concerned. this latest jobs report is a big disappointment and the bond market is tell us perhaps we should be concerned with a double dip recession at this point. do you share those concerns? >> certainly we know this is an unprecedented level of unemployment. we haven't seen figures like this in about 30 years. and we know that we are doing everything we can in our power to try to add jobs to this economy. it's a struggle. we make some progress. we have seen some jobs stabilizing in terms of job loss. when you think about it in january, there were well over 700,000 jobs that were being
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lost. that went down to about an average of 300,000. so we're about at, you know, about the same rate that we saw in the last two months. this isn't acceptable by any means. >> right. >> there are many people that are out there that are looking for jobs. we want to continue to support them, whether it's through unemployment, insurance programs, modernization programs rolled out to 30 states. >> madam secretary, if i may, though, going back to the original question. americans out there, investors out there are concerned that the jobs report right now is giving us a signal that perhaps we should bee should be concerned about a double dip recession. is the administration concerned? >> we said we would probably see the unemployment percentage rate go up to 10%. so we do know that that may happen. >> madam secretary, what's not working here? is this a stimulus? because clearly something is not working to cause any sort of
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major improvement in the employment picture. >> i think that people have to realize that this recession really did start back in 2007. and it is just horrendous. the numbers are unprecedented. i think there has been a big contraction in terms of the economy. and with that in place, we know we have to have a plan of action to reverse that trend. part of our reversal is making investment in renewable energy and careers and areas that we know will grow. health care and i.t. are going to be a part of that and renewable energy. >> we need things to start working now. you say -- these are your words, we're doing everything we can. but clearly either it's not enough or it's not working. >> well, i would just say to you that i'm not stopping in any time in my day -- any moment to not focus in on this issue area. and as i travel around the country, i do see people taking
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advantage of our job training programs. some people have already been offered jobs. i know that clearly one of the programs i visited, one of our job corp. programs, we had people preparing to be pharmacist's aide. i would say that 90% of those students were telling me they had a job offer. so i'm not going to be out there telling people that they shouldn't continue to look and prepare themselves. by all means, they should be taking full advantage of these job training programs and the level of assistance that's being provided through education, through the pell grant programs and through other opportunities. obviously we are seeing a major change in our manufacturing base. it's not completely lost because i think that'sre i think the public needs to know that we're investing in renewable energy, new technology, and most recently, a lot of the projects that we have that we're going to pay for through the recovery act, are going to be released by the end of this year. >> madam secretary, given that these job losses, as you say, are unacceptable. given we have seen revisions
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lowered to prior months, is it -- can you see the day, the moment where you perhaps go to the administration and say, we need to increase the stimulus, we need to put more money behind creating jobs, sustaining this economy? >> i know that the president is very concerned, as well as all of his cabinet members, and our priority is to create jobs. >> is it on the table that you would increase the stimulus that you would make that request? >> i am going to do everything in my power to make sure that my department is focused in on job creation. and that's what i'm doing now. we're rolling out our recovery money. it's not all out the door yet. and we need to continue to move ahead in that direction. i think, by all means, we've helped to save at least a million jobs. it could have been a lot worse had we not provided some rescue and recovery effort here. >> sure. okay. madam secretary, pleasure to speak with you. >> thank you. >> hilda solis. a quick check on the markets
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now. dow jones industrial average down by 71 pointsz. perhaps the picture improving on the back of that disappointing jobs report as we've been talking about. a couple of upgrades over at the nasdaq, have helped that picture perhaps not be as worse as it could have been. apple got upgraded and intel. nasdaq is still off 12 points. s&p 500 as you see here is down just shy of 1%. here to share than irvestment strategies, vice president and investment strategist at hwg funds. michael is president and chief investment strategist at wcm net advisers. guys, it's good to see you this morning on this friday. >> good to see you. >> david, give me your quick reaction to the jobs report today and what does it mean to the market? down down 71. is this the correction everybody has been waiting for? >> well, i think this is a follow-up to some of the poor economic data we've seen over the past several weeks. it's clear that the economy is kind of settling in. we've seen a fairly strong rate of recovery.
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we are now starting to settle in. the jobs report is evidence of that as well. what's important for investors to understand is that the market was up 60% off the bottom. a lot of that was priced in a rapid rate of economic growth. we probably won't see the 45% gdp number next year the investors were looking for. 2%. this is a good opportunity for the market to sell off, for investors to find a better entry point and get into the market here. >> michael, what do you foresee? are we going to see people jump in and buy on the dips or is this different? >> no, i think we're going to be buying on the dips. i think there are many people sitting out there basically saying, i've missed this rally. what do i do? i think it's very, very reasonable to market people back 5% to 10%. i think you're going the see entry back into the market. eng you're already seeing that on the corporate fixed income market. treasure ris and gold are strong. i think this is going to be perceived by the market as a buying opportunity. i think you've got to be careful here that you just don't buy everything. you need to buy cash flow
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oriented companies because it's not going to be a robust recovery. >> you're in a pure stock pickers market then? >> i think that's the case. i really like your question to the secretary just a few minutes ago about what's not working? i tell you what i think is not working. i think what's happening is we have a recession coupled with the leverage. it's not a typical recession. so you really have two things going on simultaneously. and it's going to be a more difficult recovery because of that deleveraging process to get rid of all that excess consumption when the savings rate was at a negative rate. >> where do you think all that money on the sidelines, quote, unquote, is going to go? do you think it's going to go to the lowest performing session on the third quarter or still to financials, industrials, materials, which is what led us in the third? >> i agree with your guest. money will rotate out of the lower quality high beta companies that led the rally thus far into high quality companies with good, free cash flow, with low debt and market share and financial growth. that's really where the leadership will be as a recovery
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matur matures, liquidity resides and risk levels come down. a lot of those companies leveraged to foreign growth. the industrials, the technology sectors from global consumer plays. that's where you're going to see the opportunity in the coming months. >> david, should we can taking a cue from the bond market and stock pickers, investor, given what we've seen as a 10 and 30 come in here, the yield? >> i definitely think that what we're seeing in the bond market is a reaction to the poor economic data, including the labor report. it is definitely going to be a stock pickers market. this is not a rising tide, lift all boats kind of scenario going forth. we've already seen that part of the recovery. this is like '03. we've seen that part of the recovery, that part of the market. now it's about picking stocks. you want to buy the higher quality, leverage the foreign growth, benefit from the lower dollar and the great productivity enhancement we've seen over the past year. >> guys, thanks.
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ipos have hit the market but have had difficult garnering large investment interest. for more on that, let's go down to the floor to bob pisani. >> commercial rel estate is looking for a recovery. where are we in the commercial real estate cycle and how is that news affecting us? this is ceo of apollo commercial real estate finance celebrating his ipo. did it a few days ago, still, we're glad to have you here. i want to ask you about the news of the day, nonfarm payroll weaker than expected. what is the impact of a weaker employment outlook in your business and in the economy? >> we're still seeing weakness in the real estate economy. we're seeing the consumer being very weak on the retail sales side. they're not -- there hasn't been an uptick in retail sales, tenants are not taking more space. we're still at a trough part of the cycle. really hasn't stabilized yet. we think we still have a ways to go. >> everyone is trying to figure out where we are in the
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commercial real estate cycle. has it bottomed? another leg down here? where are we right now? where are we going from here? >> bob, the thing you have to remember about commercial real estate is it's the second derivative of gdp. you get gdp, employment, and occupancy and rental rates. if we're coming out of the recession this quarter and employment stabilizes and hopefully picks back up next year, you're going to see a recovery in the commercial real estate market late next year and more likely in early 2011. >> okay. now, you're buying commercial mortgage backed security, debt instruments. not really buying equity, the real estate itself. why is it a better idea now to buy that? >> i've been in this business a long time. it's probably the largest opportunity i've ever seen. commercial mortgage market is $3.5 trillion. of that 3$3.5 trillion, $2 trillion is going to need to be refinanced over the next six years. so we are at the very senior part of the capital structure where we are actually invest
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today. first mortgages, investment grade cmbs, senior parts of debt instruments secured by income properties. >> i agree with your idea. if it's so great, why aren't we having such a hard time raising money recently? there's been a slew of commercial reits that are out there, including yours. you got it done. fortunately for you. only half the size you wanted. correctness was only 60%. a couple of big one, foursquare capital, they were postponed. >> right. i think the public market is appropriately skeptical of commercial finance vehicles. and without specified assets, they want to see some investment results before they take another bite of the apple, if you will. so i think the sponsorship that we and others have had has gotten us into the market. we expect to grow from several hundred million dollars to billions over the next several years. >> is the problem -- i'm just asking. is the problem the bid to ask for real estate is too wide right now? that the actual cost of -- you can't get an agreement wean the buyer and seller and what the
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property is worth so it's better to buy the debt? >> in the equity market, you're right. there's little activity because of the bid/ask. in the debt market where we have several hundred billion dollars a year coming up for refinancing and the major providers of that capital, securitized market and the banks, out of that market are now getting equity returns for debt risk and able to execute. >> five secondses. what are you buying now? what sectors? >> we like the 24/7 cities. first mortgage investments, investment grades, talf mortgage securities. looking for strong demographics. >> thank you very much. >> pleasure. >> scott, melissa, back to you. >> thank you, bob pisani. coming up next, because you clicked. microsoft one of the most searched stocks on cnbc.com this week. especially after gold machine saks removed it from its conviction buy list yesterday. we'll ask the analyst for his take on mr. softy. plus, as we go to break, your s&p top move verse this morning.
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microsoft is gaining 63% since the march lows. in line with the rest of the setter. has it run its course to the upside? dave, director of technology research with rbr capital market. dave, great to have you. i guess, you know, if you are to believe in the microsoft story you have to believe in the windows 7 story and the fact that companies will actually upgrade no matter what the vimplt is. we just got data points which indicates the economy may be softer. so what's your take? is window 7 really the thing that's going to drive the company to the upside? >> i don't think so. we currently are neutral on microsoft. we had been positive up until summer. but when you look at windows 7, it has the ability to drive some incremental demand on the consumer side. but really microsoft needs the enterprise to adopt windows 7. and usually that takes probably six months or longer for enterprise to start adopting it.
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so i think in the long-term, windows 7 will be much better than vista was. but i don't think it will drive much upside to the stock over the next six months. >> david, does microsoft need to make an acquisition. look at what others have done, do they need to go out and do something bold? >> i don't think so. i mean, their biggest weakness in their business has clearly been in the online division and partnership with yahoo!. we have to wait to see how that thing pans out. that's the one area that i think they might want to make an acquisition if yahoo! doesn't deliver the results they are expecting. if you look at the rest of the different, it's different than oracle or hp. i think the rest of the business is fine. >> what's you're out look in terms of the price action on this stock given your pessimist -- want to say pessimistic, but not as optimistic view on windows 7? >> our current price target is 25. i think the stock is range bound. if you look at estimates next year, most are assuming
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basically flat to a little bit of revenue growth for fiscal 10. i think that's kind of best case scenario. so i think we're going to have a business that is going to continue to be under pressure, a business that's going to kind of bounce along the bottom. and with that, i think the stock is a little bit range bound. >> quickly, you've gone out perform on oracle. do these levels look good? >> with the larger cap holdings, we liked oracle and stay with that stock. >> all right. >> david, thank you. >> have a great weekend. >> okay. thanks. dow recovers from the lows of the morning. we're watching it. straight ahead, breaking economic news. factory orders at the top of the hour. and chairman and ceo jonathan tisch on business travel.
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welcome back to "squawk." yes, it's out, factory orders, august, down 0.8. we break a string of four consecutive months of improvement. and the best of that run was last month, july, it was revised to even a smidge better. originally reported up 1.3. looks to me like it's now up 1.4. but it makes the absolute net
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difference that much wider with minus 0. %. even though it is an august number, factory orders, manufacturing complex, some of the remnants of the cash for clunkers and how that distorted the market doesn't make this a huge surprise. we can see a little bit of a rally in the fixed income, which already established a very wide range getting down to 310 in a ten-year now 316. but still basically very low yields. and, of course, we see that the equity markets are doling with this huge move. well off the worst levels. maybe important market to pay attention to the dlasollar/yen. the dollar index, we thought was up earlier, is now unchanged on the week. pay attention. the dollar index. now let's bring the professor steve liesman who currently is at hq, into this conversation. what did you think? i'm less worried about this than the other data, rick. i think what we had is we had a
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sales increase in august. and i'm not surprised we didn't have a production increase. i think the production increase is something you might expect to follow. the way the cash for clunkers thing worked, you cleared out inventories and created demand and pulled down to the viewer level. looking at the ex-trans level, 04. so i think that tl may be car manufacturing in our future. the data i've been worried about, rick, has been the september data, not the august data. that month came in pretty healthy. web remember, 1.3 increase in spending in the month of august if we had the better sales. but then we had those lackluster september auto sales. so i think we're going to get a manufacturing, we're not worried about that number. it's jobs number, average workweek stuff that well talked about. s that the stuff that is the issue of where we're going with the economy. >> steve, if you're, okay, you're less worried about this number. but if you take into consideration the most recent economic reports that we've gotten, and you put them all in a basket, it's not a really good
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looking basket over the last week or so. >> you know, it's not measurably worse. what is wrong with the data, scott, in my opinion. i know there are others with other opinions. in my opinion, it didn't improve sequentially, it didn't continue the improvements we had. with minus 200,000 on the private sector workforce decline, minus like 180 in the private -- in the prior month. so it didn't get measurably worse, scott. we had 52 on the ism. again, that is positive. it shows growth in the economy. but it didn't get measured better. >> steve, you know what, i'm going to keep you an the straight and narrow here. >> i rely on you for that, rick. >> second derivative was the argument. >> i agree. >> you need to use that logic now. they're getting less good. we have to give it equal rating. we're at 52 plus on the ism but the rate of change is going the wrong way. it's obviously in manufacturing. but it's worth paying attention
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to to believe that everything got ahead of itself. >> steve, the real promote of this data won't be in until next month we had the impact from cash for clunkers sort of distorting all the data that we've gotten recently until september. so in terms of finding that, we don't have that sequence until next month. >> no, that's right. i think some of the data that you had in september that wasn't as good was perhaps a perfectly expectable -- expectable bounce back from august. that's why my jury is out a little bit. i'm calling this a tie between the bears and the bulls. obviously everybody is going to take their own opinion of priors really relate it to the data here. but i disagree with rick just a little bit on the issue. i think the second derivative is flat right now. and really to pick up the words on mervin king, the head of the central bank of england, we are making a change here in the and the market has made this change from watching the change in the change to watching the level. that's where i agree with rick. we talk about the same thing there. >> gentlemen, leave it there. thank you both.
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let's look at the market check. let's check in with bob pisani at the nyse. bob, steve was talking about a battle between the bulls and bears. seems that's under way today with the dow down 35 points. >> yeah. forget about the second derivative, stock traders live a simpler live, we just watch the dollar and the virks,x. the dollar went up on the flight to safety trade on the knee-jerk reaction but fallen apart here. there's your floor for the market here. when the dollar dose gown, this is the trade where unlikely to raise rates any time soon. more for the dollar. here you go here. major factor why the market has been holding up so well. elsewhere, it's not been that bad, folks. yeah, you got the usual consumer names. that's kind of interesting. merck, johnson & johnson, usually flight to safety names. elsewhere, things you would think would get slaughtered are not. footba financials are down 2%. all the big names here, whether you're looking at the regionals,
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brokerage guys, they're all 1% to 2%. commodity stocks, you would think would be down big on the worries here. but they're not. remember, with the dollar stronger, that also -- dollar weaker, that's also helping things. finally, here's your vix here. vix almost had a one-month high. certainly not on the verge of any kind of tremendous breakout. tradertalk.cnbc.com. mike huckman, down, what, 1 1/2% on the nasdaq this week? >> look at what's happening here. i was hoping the timing might work out because we're almost flat here at the nasdaq. that's saying a lot given the news this morning and the 3% drop here yesterday. perhaps putting a bit of a safety net and bolstering in the nasdaq market today is a trio of upgrades. ubs up shares of apple to a buy and putting a $265 price target on that stock. then you had oppenheimer raising intel to the equivalent of a buy rating, putting a $28 target on that stock. and then youed a r.w. baird
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raising shares op costco to the equivalent of buy, $65 target on that $56 stock right now. checking shares of comcast, they're essentially holding their own after taking a sizable hit yesterday on all the reports reaching critical mass about possibly taking a majority stake in nbc universal. the company that owns cnbc. and finally, check this out. biotherapeutics, the new ticker is tlcr, ipo'd yesterday. the company rang the opening bell at the nasdaq this morning. jumped 11% yesterday making it the best drug company debut in two years. you think there would be some profit taking today. but look, it's up 4% right now. farmersmarket.cnbc.com. follow me on twitter at mhuckman, hawk man to shachtman. >> thank you. listen, fascinating. we're back above $70 a barrel in crude. we dipped a little bit after that data came out. it's the chicken or the egg argument. is the dollar turning? yes, it is.
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75 krens now when it comes to crude. natgas is humming. conoco philips coming out saying q-3 earnings will be hurt by weak natgas prices. you wonder if q-4 will be better. they also said their output will be down 5%. i also want to point out the rest of the complex. steel turning a little bit. getting better. mostly negative. heating oil is the weakest. look at metals because since we last checked in gold was negative, now pos pif the most of that because of the dollar trade, melissa. we are, you know, rick talked about 76.80 as a key level of the dollar trade and dollar index. we are now below that. i want to point out silver and copper still weaker than gold. back to you. >> brian shactman, thank you. the ceo of cnbc's parent company general electric says the company is holding discussions on partnerships or an idea for nbc universal unit. he's speaking at conference in
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new delhi responding to a question on whether ge was talking to comcast about buying a stake in nbc. >> partner ship with vivendi for many years? if for some reason vivendi decides not to sell, not saying the venture we've said for a long time we would consider a ipo or other partnerships and activities that would strengthen nbc for the future. that's the context of any discussion. and that's really where it stands. >> cnbc, of course, is a unit of nbc universal. that deal under consideration was first reported by the brain, our very own david fib faber. take a look at comcast. ge up there. to be fair, comcast is down by a penny after a sharp sell-off yesterday. >> melissa, another big story, thor in international olympic committee will make its choice as to who will host the summer games in 2016. today that announcement is expected around 1:00 p.m. eastern. on the list is tokyo, madrid,
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rio de janeiro and chicago. president obama went to copenhagen and is on his way back now after pushing for his adopted home city. it's a live picture back in chicago from daily plaza. you can see people starting to gather right there. you can tell which side most of these people are on. clearly they want a chicago victory and the games of 2016. early reminder, meantime, you can watch the 2010 vancouver games and 2012 london games right here on the network of nbc. remember, that ioc decision comes at 1:00 p.m. eastern. watch it right here. >> in case you're thinking that's many years away, i'm sure we will remind you again when the time is approaching. >> i can't believe vancouver is right around the concerner. >> i know. the jobs number and market reaction. dow is down 54 points. financials, the best performing sector in the third quarter. up more than 25%. also though the most volatile, double down on the group going
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into the fourth quarter? the view from the top. lowe's hotel and chairman jonathan tisch on whether he's hiring now. the health of business travel and if the worse is still to come for commercial real estate. then the length some states are going to solve their own unemployment problems. !d!d!d!d!d
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cbs funny man david letterman getting awkward laughs last night after admitting to
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having affairs with female staffers and getting blackmailed for it. piece testimony led to the arrest of a producer for the cbs news program "48 hours." >> he's going to take all of the terrible stuff that he knows about my life. and he seems to in this packet. there seems to be a lot of terrible stuff that he knows about. he's going to put it into a movie unless i give him some money. i just want to reiterate how terrifying this moment is because there's something very insidious about, is he standing down there, is he hiding under the car? >> cbs news producer identifies news roberts robert halderman is under arrest. they will be have report on the case at 11:30 a.m. eastern time. bertha, what's happening? >> scott, special committee is out with its report on the madoff and the stanford cases. those schemes and why they were
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missed. as far as the stanford case, they said between 2003 and 2005, received at least five instances where they got information that would miss, including the most flagrant, most striking, 2005 five-gauge referral letter from the s.e.c.'s ft. worth office saying it was questionable that the stanford cds could produce what they were producing and that it appeared to be a fraud. part of the reason they say it was missed in the stanford case was that finra still does not have a centralized database to give their investigators a way to track particular cases and particular firms for all of the different instances. with regard to the madoff case, they are saying they were not at fault here. they say the madoff case provides a different perspective on finr a's examination program. they say special committee did not find everybody that finra had any whistle-blower or s.e.c. referred to them any sort of
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complaints or red flags. in the madoff case they said they could not have known. they will be mutting out a plan of action in the next few weeks on what they're going to do to remediate this situation. back to you. >> okay. bertha coombs, thanks. democrats on the senate finance committee voting to limit the pay of insurance executives. the move comes in response to charges expanding health care coverage would benefit those firms. if approved, it would limit the tax deductibility of compensation of insurance executives to $500,000 a year. under current law, businesses can deduct up to $1 million a year in compensation for executives. here's how some of those health insurers are trading right now. they are not downside, including aetna, wellpoint, united health care, and humana. last quarter the kbw bank index joined a decline. up 125% since the march low. financials, in fact, one of the biggest performers and best performer for the third quarter.
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what is ahead? antoi antoine, portfolio manager of two five-star morningstar funds. great to speak with you. first, i want to ask you about bank of america since there is so much news swirling around bank of america. yes, they have gotten rid of a regulatory overhang with ken lewis stepping down by the end of the year. the latest reports, including those from our own charlie gasparino is that they will replace lewis with an interim ceo for a area year or so and t new ceo. seems to be a lot of uncertainties still surrounding this stock. what's your take? >> there's no doubt they have a lot of valuable businesses. it's important to get the management issues behind them and certainly the swirl around ken lewis has been huge. i think he's recognized that, and so has the board. i think it's right thing for him to step aside. unfortunately, because in some cases he's being blamed for things he is not control of and
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other cases he is culpable. in terms of long-term stability you need to hire the right person and not have an interim ceo. i think there's plenty of qualified candidates internally and externally. i don't think there's a shortage of people to put in that job. >> we do want to call our viewers attention to comments you made by the vice president, joe biden. he said turn employment numbers are tough news but the u.s. is doing the right thing to move in the right direction. he also said that the u.s. will, in fact, recover despite these disappointing numb fwers this morning. of course, we had the labor secretary on earlier. she also says that they were unexpectable. these numbers. >> down 263,000. much worse than expectations. let's get back to the discussion on financials. one of the best performer, of course, in the last quarter. how do you foresee things developing in this quarter in a scenario where you may have a continued flattening of the yield curve? >> well, i mean, the yield curve
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is already incredibly wide. and certainly, you know, banks have been huge owners of fixed rate instruments so they could certainly take advantage by selling. from a spread perspective, you know, banks interest rate spreads are rising nicely because they're charging more to customers on new loans or refinanced loans, from a spread perspective. deposit funding has been terrific for banks. inflows and deposits have been good. deposit costs are very low. if you're a bank, you're really entering into a period of very nice spreads. you know, offsetting that is obviously the rising nonperformers and the reserve building that's going on. i think the difference that we're really going to see in the earnings is those that are near the end of reserve building. maybe even a couple of names may be able to release reserves. those come into out perform though as continue to build and continue to chargeoff. >> we have to leave it there. thanks so much for your time. we do appreciate it. >> glad to be with you. later on this morning, much more on the big number of the day and the month, being the
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jobs number. we're also talking about the pros and cons of offshore oil drilling. if it were to happen in mass, how long would it take to really have an impact? and coming up next, the state of the hotel industry and business travel with a man who knows the business inside and out. of course, talking about lowe's ceo jonathan tisch. he is here ahead of the incoming winter travel season. how's business?
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shares of the luxury hotel chain loews on a tear since the
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march bottom, 90%, with the holiday travel season around the corner. jonathan tisch is chairman and ceo of loews hotels and is happy about the fact that the giants are 3-0 and looking good. good to see you. >> thank you, guys. >> how is business right now? specifically for the business traveler, certainly what we focus on a lott. next week, british airways announced this new business class service between new york and london. hey, maybe they think that things are improving. what do you say? >> keep the mind airlines have cut capacity quite a bit. any new addition gets headlined. business travel is just starting to come back a little bit. now, the problem is that consumers are still beat up. so they're not necessarily on the road. and on the meeting side, our industry has just been decima d decimated. combination of ceos keeping an eye on the bottom line. they don't like the optics of having a meeting.
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the rhetoric coming out our nation's capital in the spring demonized our industry. that's a bad mix for lodging and travel in general. >> if you have both leisure travelers and business, how do you pull that backs a things turn around, and can you? >> that's exactly the problem. occupancies are starting to creep up a little bit. we've also pricing power. we don't have the ability to get those rates. and depending on the market and the resorts, are feeling it even more than the inner city po hotels because, once again, the whole notion of doing something on the resort is wasting shareholders money. our studies show the opposite. we did a study with oxford economic and the return on the business dollar, in terms of growth numbers, is 1250, 380 in profit for every business travel dollar spent, you get a 380 return in profit. we think that business travel is important. it's important to this country,
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economically and also in terms of the job creation, our ability industry has the ability. >> getting back to the promot n promotional activity, how deep has it been and have you been able to slowly, at least, reduce that activity? >> once again if you look at resorts, discounts are pretty steep. if you want to go to a destination that you think you couldn't afford historically, now is the time to go. on the business side, once again the city travel is starting to pick up a little bit. but we discounted a lot in our industry. you are starting to see also as we unravel the cmbs mess, a lot of hotel are being foreclosed on. they have troubled property in their portfolio. we still as an industry have a lot to deal with. >> i asked you coming in here as we await for the announcement on who is going to get the 2016 games in chicago. you said none. i also asked you how tough is it to build a property right now if you wanted to go there. you said very difficult. >> if you weren't on the ground with a hotel prior to year ago
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when the credit market seized up, you're going to have a very tough time trying to build something right now. there is no credit. the demand is not there. it's very hard to justify your cost in terms of what your returns will be. >> always good to see you. thank you, guys. >> thank you, jonathan. we should alert you to the fact that we are making somewhat of a comeback in the markets right now. the real tale is in the financials. financials turned to the positive. the nasdaq has just turned positive. and s&p is down by just about 5 1/2 points. so, all that, the worse than expected payrolls numbers, we see a lower open but then we see the market trend higher throughout the day. that seems to be coming to fruition, at least so far. straight ahead with roughly 10% of the country out of work, which are bucking the trend and how are small businesses holding up? our conversation on today's jobs report. plus, the ban on offshore drilling lifted a year ago but the debate rages on right here on "squawk on the street."
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welcome back. in the headlines, vice president
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joe biden calling today's job report tough news but says the administration is doing the right thing to fix the situation. also on the economy, factory orders dropping for the first time since march. coming in at 0.8% in the month of august after rising 1.4% in july. and apple is up more than 4% right now. that move helping to push the nasdaq intoes po positive territo territory. >> real turn for the better in the nasdaq, few upgrades there helping things along. let's look at the markets. the nasdaq turning positive by a couple points. now jones industrial average coming well off the lows of the early session. s&p down as well, just a few points or so. take a look at the stats. still decliners are far out-pacing advancers here at the nyse. proxy probably a different picture over at the nasdaq as we mentioned, things turning positive. although you do still have a 2-1 advantage from decliners over advancers there. >> also we should bring our attention to that alert at the
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bottom of your screen. time warner is not interested in nbc. if we can check the intraday reaction in time warner shares which rose yesterday on the back of reports that there could be a potential comcast/nbc universal deal. that is the latest on that. meantime, job losses for september far worse than expected, bringing turn employment rate up to 9.8%. that is the highest jobless rate since june of 1983. but another alarming trend, small businesses are shutding down at a faster pace than medium and large size firms. here with more, former assistant labor secretary under president reagan and heath ackman. brato have you both. keith, i want to start off with you. is this a typical trend that we see, that small businesses tend to fire a little bit more slowly than perhaps the medium to large size business snes put this trend in context for us. >> i think small businesses tend to keep their people as long as they possibly can because it's like a family.
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and it really takes a lot to have a business owner want to get rid of someone that they've worked with very closely and know first name, know their family. so this is one of those lagging things that happens far into a time of downturn. >> so, ben, put that into perspective for us. given this is an expected sort of trend that is happening, does that make you believe that the worse is yet to hit small businesses? >> well, one of the most risky times for small businesses in the coming out of a recovery because they've used all their cash, all their resources, they don't have people, they don't have inventories, they don't have things in the pipeline. and when they start to gear up, they run out of cash. and we have a real problem now with access to capital and the cash that we need to run our businesses. >> al, you've got small businesses employing 50% of the workforce, accounting for about 38% or so of gdp. i hope you had a chance to see meredith whitney's op-ed today
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in the journal that access to credit to small businesses. she said small businesses have never had a harder time getting a loan. what's the impact there? >> the impact is terrible. when you compound it with the fact that the stimulus bill basically leaves small business out in terms of assistance in the forms of tax credits, job credits, and targeted training grants, small business is in a very bad position right now except in those states where we have entrepreneur ral governors trying to solve the problem. >> what's going on? is the stimulus not working? questions that we posed to the labor secretary this morning. >> absolutely the stimulus is not working from the standpoint of small business. i talked about this for the last six months. small businesses have been left out of the package. and we're trying to solve the employment problem with the global fortune 500 instead of using the long theory and using the 6 million small businesses in america. if they each hired one person we would be cracking the back of this unemployment problem. >> keith, just to take the other
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side of the arrangement. i don't want to be a defender of anybody or any administration. but to be fair, the stimulus money is not spent yet. perhaps that money is just taking time to take effect for small businesses. what's your take on the situation? >> we've seen some recognition in the administration that small business is truly important in this recovery. just the other day the small business administration change its rules on interest rates which would, i think, help bring out 7a loans more -- make them more available. we do see that there needs to be some changes in the stimulus package and the availability of t.a.r.p. money to make lenders eager to loan to small businesses. we just need a new paradigm because no small business that was around now that was around the 2007 has the same good credit score that it had in 2007. >> let's look at the states with lower unemployment rates than the national average. i'm talking about virginia, delaware, north dakota, south dakota, and colorado. and before you answer the
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question, let me just mention here for our viewers that we're going to turn positive on the dow. in fact, we just did. just wanted to alert everybody to that situation. hugging the flat line here. the situation in the markets has clearly improved. please, i'm sorry, the question there. >> is this to me? >> keith, about some states have lower unemployment rates than the national average. >> well, it's no racket science that when you create a situation that's friendly to business, business will go there. we will respond and succeed. that's what we need to have, i think, in an overall perspective in this country. >> gentlemen, thank you very much for your time. al and keith. again, as scott mentioned, with we are positive. as we mentioned before, the tales in the financials, we're up strongly actually when it comes to the financials. the xl, tracks the s&p financials by more than one full percentage point. also seeing strength in technology across the board. apple is up sharply on the back of that upgrade. by about 2% or so.
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ibm is posting some nice gains. we are seeing a turn around here with, of course, the help of a weaker u.s. dollar which has been sort of the relationship that we've seen. >> there was a positive report on the semi conductors today. that is clearly helping the semi conductors. so you've got intel up. but gains almost across that entire block. that's helping things along as well. did mention this a minute ago but bewant to go more in-depth now, a little bit more here on what meredith whitney is saying in that op-ed in the "wall street journal." she writes that small businesses are shedding jobs at a faster rate than large and medium size companies. the influential analyst writing despite signs of an economic recovery, small businesses have been left out in the cold. she says those companies which employ 50% of the country's workforce and contribute 38% of gdp are not getting enough access to credit, which means they can't grow and they can't hire. now, still to come, stocks staging a comeback, but today's jobs number calling the economic recovery into question. find out what it means for your
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money heading into the weekend. but first, america's oil independence hangs in the balance and so does the white house's decision whether to green light the offshore drilling. once upon a time, mutual funds promised to simplify investing. what happened? i used to ask my broker for advice. funny how the "best" funds always turned out to be his. what about the funds we bought years ago? yeah. how do we know they're still right for us? td ameritrade does mutual funds differently. with free, unbiased research. like td ameritrade's premier list. it shows me top picks,
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of course, we are tracking the market very closely after that weaker than expected jobs report. it does look like stocks are struggling higher. the dow jones industrial average off the worst levels of the session. now down by seven points. essentially unchanged on the session. is nasdaq composite meantime
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higher by 0.2%. the s&p 500 is down by less than one point. we are seeing strength in the financials as well as in the tech trade. jpmorgan is of note, higher by 1% after a sharp sell-off in yesterday's session. goldman sachs higher by 0.6%. nice turn around here. meantime, a year ago this week when congress voted to lift the ban on u.s. offshore drilling. now interior secretary is delaying a new five-year plan for oil and gas, drilling along the atlantic and pacific coast indefinitely. why the delay and what does this mean for the goal of u.s. energy dependence? weighing in, matt cohan, director of analysis with the environmental defense fund. gentlemen, great do have you with us. >> thank you. >> john, at first glance you might think that this would prolong the time frame for u.s. energy independence. at the same time, the administration is putting money into alternative fuels which
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would theoretically put us on track towards energy independence. how do you assess the overall situation here? >> well, we're concerned about the delay so far in this administration. but i think it's important to note that no matter what sean their you you look at we're going to continue to use a lot of oil in the coming years and we're going to import a lot of oil. so what we need to do is to produce that oil here instead of import it. the alternatives will play a role. remember, we have 250 million cars that don't plug in. only alternatives being talked about are electricity. it's key, we're going to need more oil for the future. >> john raises good points. the fact of the matter is that we are still import that oil. why can't we just drill it off our own shores because it will take a while for all of these alternatives to be a viable and economic solution? >> well, first of all, the main point is we can't drill our way out of the problem we face. we can't drill our way into energy independence or energy security. we've got only 3% of the world's reserves and we consume about a quarter of it. that means whatever we do about
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offshore drilling we're still going to be importing middle east oil. if we opened up these leases right away, we wouldn't get that oil until 2020 or later. this isn't the solution. the solution is to invest in alternative energy technologies. that means capping carbon emissions and driving the market forward to find those new innovations that we can grow here at home. >> matt, the republican governor from the state of alaska apparently thinks we can, in fact, solve our energy needs and meet them here at home. he writes in what i believe is an op-ed that says alaska's outer continental shell contains an estimated 27 billion barrels of recoverable oil and 130 trillion cubic feet of natural gas. >> if you look at the lower 48, which has been the focus of a lot of the politics on this, that amounts to a tiny blip, a drop in the bucket. the department of energy says we could open up all that, leasing, and not really make a dent at all in energy price or in gasoline prices or in our energy
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supplies. again, what we need to do is find cheaper, cleaner, more abundant sources of energy that we can grow right here, that we can pro drus right here at home. to do that we really need to shift away from the fossil fuel economy and, over time, shift to a cleaner, low carbon economy. that's what the house legislation was passed in june would do and the senate, on wednesday, introduced a bill or started thinking about a bill to cap carbon emissions. that's the way to drive the innovation we need in the long run. >> john, part of the reason why we may not have moved forward on this is the administration may be going through the same thing that consumers are doing, i'm looking at oil at 70 bucks, not the 140 it was when we were having this debate in the first place. >> well, no matter what the price is, we have 250 million cars that don't plug in. all these alternatives that matt cites are electricity. until we develop that oil in the united states, which would have a tremendous economic benefit in terms of jobs, in terms of revenue, and in terms of energy
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security, we're going to be lacking for a solution. maybe if you look at all of the oil that we could produce, in other words, 116 billion barrels, if you produced that over 30 years, it would be 11 million barrels a day. that's more than what we import of crude oil. so let's be very careful with statistics. >> hold on, because the department of energy says we could get more out of the cap on carbon in terms of cutting our foreign oil import than we could in terms of offshore drilling. we need a comprehensive solution here as the obama administration has said. but we need to get started as soon as possible on those alternatives that will really help us get our economy on a strong footing for the 21st century. that means we can't be debating about a tiny bit and a very expensive oil on offshore drilling. we need to be talking about a cap on carbon. and that's what i think, you know, the american petroleum institute, if they came out and said cap on carbon is part of the solution, i think that -- >> john, we've got to go. go ahead sglerch if you have a
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cap on carbon you're going to need more in the future. we need a policy but the policy you're advocating is simply one sided and ignores where we get 40 percent of our energy. >> okay. guys, got to leave it there. thanks so much for a great street fight. >> thank you. straight ahead, this morning's stocks way off their lows of the session. the dow flirting with positive territory. now down 18 points. what should you do with your money heading into this weekend? we've got your friday trade, next. but first, trish regan, what can we expect only on "the call"? >> there is no singing today, scott. coming up at the top of the hour, big show for you. we're going to talk about how talks are continuing to between ge and comcast over nbc universal, the parent of this network. we're going to discuss just exactly what a deal might mean for the entire entertainment industry. and with the pronouncement of the odd fed, whether or not bernanke has confused the markets. we have all that plus the latest market reaction to the jobs report. but first, "squawk on the street" is back right after this
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break.
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we have a slow growth outlook. it's the new normal. a number of models have been broken. we're in a phase of deglobalization, those forces mean the world has changed going forward and we're looking at a growth rate in terms of the real economy of 1% to 2% as opposed to 3% to 4% which we were used to. >> that's bill gross weighing in on the economy. if this is the new normal how should investors be positions themselves. joining with us friday trade is our chief market strategist and an equity analyst. great to have you both with us. bob, let's start off with you. what we've seen in the market so far, the turn around, do you think it's that appetite investors have, people waiting for that pull back to get back into the market. >> a lot of people have been waiting for the pull back.
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we're down 5% from the start of the day. there's more upside potential in this market. what you'll be seeing going forward is a slow growth economy. but we're in early stages of a recovery phase and it's a matter of positioning yourself for that early growth. >> that's what made a sizable correction from taking place, people continue to buy those dips. >> that's true. one stat we like to look at is the amount of money market cash on the sidelines. there's a trillion dollars more than in mid-2007. we're only down 400 billion from the peak levels in march. we continue to believe as you see a handful of pebble sent in a downturn in the market like we've seen four or five times the market continues to rally on that news and we've seen some data points, jobless data that
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points to a little more weakness but we'll see if people put that money to work here again. >> bob, what would you be buying going into the weekend? >> i like the basic materials sector. we've been overweighted from the basic materials and we continue to favorite. what i like, new corp. fourth largest steel maker in the world. it uses many mills as opposed large mills. it's well known for its management. its quality. the company has not laid off a single employee. the company has 29% debt to total capital. 15 1/2 times next year's 34% growth in earnings. only about two times its book value. i also like cleveland clip natural resources. it's a maker of iron ore pellets. >> dennis, thank you very much.
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your picks are volcano, johnson controls and boyd. thanks, gentlemen for friday trades. >> the dow jones industrials off its loss after a disappointing jobs report down 27 points. the nasdaq for a brief time turned positive but now negative along with the s&p. >> stay tuned. more "squawk on the street" on the other side of this break.
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welcome back to "squawk on the street." i want to update a couple of the stories we're following. cit, that company has followed through with what we tould it would, which is namely a dual task restructuring it's offering it's debt holders, either an exchange offer in which it hopes to retire some of its debt or a prepackaged bankruptcy which, again, it needs consent of many of those debt holders in order to proceed with. that will take place over the next three to four weeks. those skoents and that exchange offer. in talking to a couple of bond holders they point out that
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perhaps the junior security holders may not be as willing to go along as more of the senior of security holders. although there's a graduated scale us a might expect for the discounts and what they would receive in terms of face value and the new bond extended majority and equity in cit. we'll see. could be an interesting process regardless. we'll ultimately see whether the company if it's not able to get the exchange offer done is able to get the pre-package bankruptcy done. the hope is either way they get something done quickly and, therefore, preserve what they believe is significant franchise value at this company. as for yesterday's breaking story that we had for you on talks between ge our parent and comcast about a changing of control of nbc universal under which comcast would end up owning 51% of the company those talks continue. that's very important to keep an eye on. comcast stocks needs to calm down after a